Dáil Éireann Debate, Wednesday - 15 April 2015
124. Deputy Patrick O'Donovan asked the Minister for Finance the tax position in relation to farmers who add their son or daughter to their herd number; and if he will make a statement on the matter. [14510/15]
Amharc ar fhreagraI understand that this question may relate to the new EU Basic Payment Scheme for farmers. I am informed, in that context, that where an application for the Basic Payment Scheme entitlements is made in respect of a herd number which is in joint names that any entitlements awarded will be owned in those joint names. Given that understanding, I am informed by the Revenue Commissioners that the correct tax treatment in relation to a farmer who has added his or her son or daughter to his or her herd number can only be determined by reference to the specific terms and conditions agreed between the parties and in the absence of this information it is not possible to give a definitive answer.
However, in general, where for example a parent permits a herd number to be held in joint names with a son or daughter this will be treated as a disposal by a parent of his or her entitlements under the Basic Payment Scheme. An entitlement is a chargeable asset for Capital Gains Tax purposes. Accordingly, any chargeable gain arising on the disposal of such entitlements is ordinarily liable to Capital Gains Tax. The first €1,270 of any gain is exempt from Capital Gains Tax. Where the gain exceeds that amount, Capital Gains Tax will only be charged on the amount in excess of €1,270. The current rate of Capital Gains Tax is 33%. There may also be a Gift Tax implication arising on the disposal of the entitlements but there is a tax-free threshold of €225,000 available on disposals between a parent and a son or daughter. In addition, there is an annual €3,000 exemption and, should any Capital Gains Tax be payable on the disposal of the entitlements, the Capital Gains Tax paid is available as a credit against any Gift Tax liability arising as both the Capital Gains Tax and Gift Tax liabilities arise on the same event.
